“Iran formally invited Bangladesh last month to join $7.5bn plan

India remains hesitant because of disputes about prices, transit fees and its volatile ties with Pakistan”

DHAKA: Energy-hungry Bangladesh is examining an offer from Tehran to join a much-delayed project to pipe natural gas from Iran to Pakistan and India, an official said on Tuesday.

Last month, Iran formally invited Bangladesh to join the long-stalled 7.5-billion-dollar trans-national gas pipeline, dubbed the ??peace pipeline??, Bangladesh??s energy secretary Mesbahuddin Ahmed told .

??We have sought more information on the offer, which we will examine,?? he said. A spokesman for the Iranian Embassy in Dhaka confirmed the invitation.

The pipeline plan would see gas carried from Iran, which has the world??s second-biggest reserves after Russia, to Pakistan and then India. New Delhi has hesitated over the project because of repeated disputes about prices and transit fees and its volatile relationship with Pakistan.

But Hossain Mansur, the head of Bangladesh??s state-owned energy giant Petrobangla, told AFP: ??Personally, I??d welcome the offer.??

Bangladesh has offshore gas fields, but the country??s energy reserves are being depleted fast, Mansur said.

The government estimates current gas reserves will run out by 2014-15 at present consumption rates unless new gas structures are discovered.

The country has been grappling with a severe gas crisis in the past three years, with demand shooting up to 2,500 million cubic feet a day, against a supply of 1,950 million cubic feet a day.

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sources:p Project backed by World Bank and Asian Development Bank has been questioned over impact on indigenous community.
Four years after operations started Lafarge’s gigantic limestone mine in Meghalaya state, north-east India, is still at a standstill, pending a decision by India’s Supreme Court.

In February the court ordered a temporary halt to mining, demanding the French firm carry out an additional environmental impact assessment focusing in particular on protection of biodiversity on the site and in nearby forests, and prevention of sediment dispersal towards the river. The shut-down is costing Lafarge Umiam Mining Private Limited (LUMPL) $3m a month.

In 2006 Lafarge, a global leader in cement, boasted about the diplomatic and technical expertise deployed to locate this massive industrial facility, costing $275m, on the border between India and Bangladesh. A 17km-long conveyor belt can carry up to 6,000t of limestone a day to the cement works on the other side of the border, where the supply of gas, essential to the production of cement, is plentiful.

In 1997 the project gained the financial backing of the Asian Development Bank and the International Finance Corporation, a World Bank subsidiary, on account of its contribution to developing this out-of-the-way area.

But in 2008 a confidential report by an ADB mission highlighted shortcomings, in particular the lack of transparency in the purchase or lease of land belonging to indigenous peoples. The report, which Le Monde consulted, concluded that the use of a go-between fell short of transparency requirements and did not comply with ADB policy on good governance.

The go-between in question was SG Lyngdoh, a member of the Meghalaya state parliament. In the mid-1990s he negotiated the purchase or use of land owned by indigenous peoples. From 1997 onwards he gradually sold the assets of his own company to LUMPL, a joint venture also involving Cementos Molins of Spain.

Under the Indian constitution, land in tribal areas cannot be transferred to “non-tribals”, unless the transaction contributes to the development of local communities. “And so far no one has benefited from it,” says a member of the Shella Action Committee, which opposes Lafarge’s incursion.

Lyngdoh, however, convinced the authorities to allow him to sell the land he had purchased to foreign organisations. “As far as we know land acquisition policy followed the relevant ADB rules,” a Lafarge spokesperson said.

In the village of Nongtrai, where the population has transferred land-use rights to the mine, Lafarge executives show off the recent improvements: a football pitch, an extension to the school, the purchase of six looms for the women of the village and a visit by a mobile clinic at least once a week.

“It is not much. Above all LUMPL has not allocated an annual budget for local community development. Projects are funded piecemeal,” says Kai Schmidt Solau, who took part in the ADB mission.

In February the Supreme Court decided to appoint other bodies to implement sustainable development policies. It also ordered a fund to be set up and endowed with $4m a year ? existing investments are estimated at $200,000 ? to be paid for out of royalties on the limestone. The fund will be managed by NGOs and the state governor for villages near the mine.

At Shella, villagers are demanding more jobs. “Out of 300 jobs on offer, we only got 50,” says village councillor Tobias Tiewdop. “And the lowest wages are only $65 a month, not enough to feed a family.” “Mike Cowell, of LUMPL’s parent company. responds: “A third of the workforce is allocated to security duties and we cannot give that work to local people.”

Lafarge now plans to invest $1m in a scheme for local residents. “But it is difficult for us to deploy sustainable development policies until we are sure we can operate the mine,” Cowell adds.

The villagers are already dependent on revenue from the mine. Although they only receive 25 cents per tonne of mined limestone, a third of what the owners of small mines in the vicinity ? they all dread what would happen if Lafarge actually left. “We would have to take our children out of the school and find other means of subsistence,” says Daioris Stembon, deputy-chair of the Shella women’s council.

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Bangladesh has banned beating in schools after an upsurge of “inhuman” treatment of pupils by teachers, an official said Tuesday.

“Corporal punishment hinders the progress of a student,” education secretary Syed Ataur Rahman said in a government order issued late Monday to schools nationwide.

“Teachers should help the physical and mental growth of the students to flourish — they should be grooming them so they grow up as worthy citizens of the country,” the order said.

Rahman told AFP that the ban on beating and caning was because the government had “seen that these punishments can be inhuman”.

“Some parents have even attacked teachers for beating their child,” he said, adding that corporal punishment could also cause truancy, as pupils avoided classes at which they had been beaten.

The move comes after the country’s High Court urged the government to tackle growing cases of excessive corporal punishment in schools.

In March, eight Bangladeshi children received treatment in hospital after being caned by their headmistress for forgetting to bring coloured pencils to school.

Bangladesh has more than 30 million students in schools and madrassas — and nine out of 10 are physically beaten in school, according to a report released last October by the UN Children’s Fund (UNICEF).

The report, which surveyed more than 3,800 children aged between nine and 18, found that the most common form of physical punishment was with a cane or stick.

It also found that seven out of ten children were physically punished at home.

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By K. ANIS AHMED Sources :
As Chinese wages rise, other developing Asian nations have an opportunity to attract industries that are being priced out of the mainland. Vietnam and Indonesia are already benefitting from shifting investment, and Bangladesh should too. But the country is being held back by one critical shortcoming?hostility to the free market.

The Bangladeshi economy has plenty of other handicaps, to be sure. Some pin the blame for slow growth on political corruption and poor governance. Others cite power shortages and the lack of good roads and efficient ports. All this is true.

However, after decades of reform and tweaking policies, it’s time we admitted that the problem with the business environment goes deeper. Socialist thinking pervades public-policy circles and the public debate.

.This might surprise outsiders, as Bangladesh was never a communist state. But socialism was one of the country’s four founding principles, and many industries were nationalized in the 1970s. Leftist intellectuals who pushed Bangladesh toward socialism four decades ago continue to have an outsized influence in their new incarnations as heads of nongovernmental organizations, think tanks and media outfits.

These thought leaders mean well, and they don’t see themselves as opposing investment. Indeed, no one argues for outright socialism anymore; rather they agitate in the name of worthy goals such as “rights” or “social equity.” The dialogue goes awry, however, because the intelligentsia don’t recognize wealth creation as the ultimate solution to welfare.

The government often includes left-leaning civic leaders on committees to review laws, while excluding industry representatives. The resulting laws are hostile to investors. For example, new legislation in the higher education sector would impose harsh restrictions and penalties on the institutions. Private universities are forbidden from collateralizing any assets, even for the university’s development, though the same law requires them to build expensive campuses.

In the housing sector, a new “Detailed Area Plan” has finally been published. Almost two decades in the making, it has been outpaced by a doubling population and unplanned sprawl. It no longer answers the housing needs of one of the world’s most densely populated capitals. While the government is now trying to broaden the dialogue to find practicable solutions, a segment of the activists and media seem more interested in punishing developers.

More puzzling perhaps is a new telecommunications law that imposes astonishing fines and leaves little room for appeals. It also grants the ministry sweeping powers to change licensing terms. This sector has drawn millions in foreign investment in recent years. In all these cases, the regulators’ need for control seems to override any concern about investor reaction.

All this has created a culture in which companies can be attacked with impunity, with certain NGOs and the media stoking workers’ grievances. Last Friday, a mob of garment workers rioted in central Dhaka, smashing vehicles and attacking police. This despite the fact that the government just raised the minimum wage by 80%. A number of garment-industry owners have sold off their stakes in the industry citing violence by workers, even though their factories were compliant with local and international regulations.

The Bangladeshi people are naturally entrepreneurial. From the hundreds of garment factories to the innumerable workshops and tea-houses lining the roads and highways, the sheer irrepressible desire of the people to work is evident everywhere. Yet this urge is suppressed. It is almost as if the country is divided against itself.

Society puts the highest value on being an intellectual, so that the brightest students compete to get into the public universities. They then join a tiny elite, who imbibe the leftist ideology at school, enter the bureaucracy and NGOs, and keep promoting retrograde policies and ideas.

As long as most local intellectuals consider a capitalist identity or ideology a terrible stigma to avoid at almost all costs, there is little hope for a more pragmatic dialogue. No country that constantly disavows the principles of capitalism can become prosperous. The burden of anti-business laws affects millions of micro-decisions and actions that make up a day’s commercial activity. Even a tiny hesitation at every turn can add up to a large difference between competing economies.

Bangladeshis wonder why their country can’t attract even a fraction of the funds that flow to Vietnam. Fixing infrastructure and tackling corruption will help. But the country won’t succeed until deeply rooted hostility toward business is repudiated.

Mr. Ahmed is vice president of the University of Liberal Arts Bangladesh Foundation

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Finance Minister Pranab Mukherjee will visit Bangladesh on Saturday with a billion-dollar credit package under which funds will be made available to the neighbouring country for development of communications and other infrastructure facilities.

Mukherjee will also call on Bangladesh Prime Minister Sheikh Hasina, Foreign Minister Dipu Moni and Finance Minister AMA Munith during his four-hour visit tomorrow.

“The Finance Minister will review the implementation of agreements reached between the two countries earlier,” said official sources.

The credit will be provided for development of a range of projects in communication, railway, and dredging in major rivers.

Earlier in January, during the Prime Ministerial level talks between Sheikh Hasina and Dr Manmohan Singh, India had agreed to provide US one billion dollar line of credit of Bangladesh for a range of projects.

Mukherjee is expected to review Indo-Bangla ties as well as decisions taken during the Prime Ministerial level talks held in January.

The Finance Minister’s visit assumes significance, as this would be the first visit by a senior Indian leader after Hasina’s isit

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Today 04-08-2010 at 4 pm BD Red is openning the Abason Mela at Engineers Institute of Chittagong .

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Bangladesh is loose attraction and service standard for foreign Investor .(sources)As Unctad released its World Investment Report for this year, a few curious things emerged.

The first — Bangladesh scored quite low as a foreign direct investment catcher in South Asia, even much lower than Pakistan. And the second, the comments of the Board of Investment executive chairman who found not energy but red tape as a determining factor for investment decisions.

It was a shock that foreign investors still prefer Pakistan as their destination rather than Bangladesh. In Pakistan, suicide bombings no more elicit any shocked look from observers, as it does not for Afghanistan or Iraq either. Pakistan is today torn by sectarian strife. Whether it will be run over by the Taliban any time soon is a current speculation, and world leaders are rather more concerned with what will happen to its nuclear arms –whether those will fall into the hands of militants.

Bangladesh, in comparison, offers a far greater safe place for investment. It did not suffer from a terrible anti-insurgency fight like Sri Lanka did, and for which Sri Lanka’s FDI flow also dipped sharply. The remnants of the militant bands in Bangladesh are on the run and the government is firmly committed to fight extremism. Bangladesh’s economic health is also quite stable in the region, and it has made reasonably commendable advancement in social index. And yet we scored low — we need to think hard about it.

Why countries like Pakistan and Nigeria — you would find it hard to book a ticket to Lagos because of passenger pressure — are still preferred by investors, needs to be looked into carefully. It is the policies, opportunity to make money, and image that matter most.

When Bangladesh passed a new telco law that threatens stringent punishments such as Tk 300 crore fines (which is much higher than the capital of many telcos), and arrest without bail for delinquency — it sends the wrong signal to investors across the board. And a country’s image is built up on such signals put together.

Then there are the Board of Investment chief’s comments. Since he took over as the board’s boss, Dr SA Samad has been repeatedly denying the fact that energy crisis is a big deterring factor for investment. It may be a conscious denial from him, since he once sat at the energy ministry, and knows very well what a crucial role energy — both electricity and gas — plays in investment. He also must have realised that the Awami League-led government in fact wasted its first one and a half years regarding the energy front, and that energy will emerge as a crucial issue for Awami League in the next election about three and a half years away.

Any entrepreneurs’ gathering, be it formal or informal, is replete with talks of how their businesses are suffering due to load shedding and gas crisis. An investor, who runs a big dyeing factory in Gazipur, was recounting only last night how judicious he was to have his factory shut down because of gas crisis.

“I am lucky. I paid off my bank liabilities earlier, and so it was an easy decision to shut,” he said.

The person sitting next to him claimed he is even luckier. His factory’s gas supply came through the same line as that of a BNP leader’s. The BNP man’s connection was snapped as he defaulted on bills. That boosted gas pressure for his sari factory which is now running at full steam. Others around him are not that lucky, he said.

So, downplaying a problem would not help the situation, as the BoI chief is trying to do. Rather it might send wrong signals to policymakers, and the government’s efforts in solving the energy crisis might slacken.

The second comment the BoI chief made is even more curious. He said bureaucracy is the major problem for investment. True. But then the question comes, what the government has done to reduce red tape? The Regulatory Reforms Commission has been let to die only because it was conceptualised and formed during the caretaker government. And so is the fate of the Better Business Forum. The recommendations these two platforms made remain largely unimplemented. Finance Minister AMA Muhith, in his first budget, after the Awami League-led government came to power, promised that a new body would be formed to push through regulatory reforms.

That promise is forgotten today.

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Sources :The amount of foreign direct investment (FDI) in Bangladesh has reduced about 36 percent between 2008 and 2009.

According to the World Investment Report 2010, which was launched on Thursday, the country only received $700.16 million in FDI in 2009 compared to $1086.33 million in 2008.

The report says Bangladesh stands fourth on the list of eight South Asian countries receiving FDI.

Dr. M Ismail Hossain, a Jahangirnagar University economics teacher, unveiled the United Nations’ report at the office of the Board of Investment (BoI).

Hossain attributed the decline to the gas crisis in the country and global economic recession.

BoI executive chairman SA Samad, who also spoke at the launch, said he believed that FDI had declined as a result of bureaucratic tangles and lack of the board’s unitary power.

He claimed gas, water and political unrest had no impact in the reduction of the inflow of the investment.

Samad said he was optimistic that the country would receive greater FDI in 2010.

Also speaking at the press launch, BoI secretary Sultan Mahmud said there were already signs of recovery and that joint and foreign direct investment in January to June 2010 was larger than the level of investment that took place in the same months in 2009.

Mahmud said in the first six months of 2010, there had already been a total of 93 new projects, amounting to investment of Tk 23,911.922 million and the creation of around 25,000 new jobs. This compared to 129 projects, accounting for investment of Tk 46,896.015 and the creation of 33,000 new jobs in the whole of 2009.

The BoI secretary also expected the rate of investment to increase further, as investments tend to increase in the closing months of the year.

Privatisation Commission chairman Mirza Abdul Jalil, and BoI members, among others, were present at the launching ceremony.

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Lower labour cost creating competitive benifit for Foreign Investment.(Sources)GAZIPUR, Bangladesh ? The eight-lane highway leading from the Bangladeshi capital, Dhaka, narrows repeatedly as it approaches this town about 30 miles north, eventually depositing cars onto a muddy, potholed lane bordered by mangroves and small shops.

But this is no mere rural backwater. It is the sort of place to which foreign manufacturers may increasingly turn, if the rising wage demands of factory workers in China prompt companies to seek new pools of cheap labor elsewhere.

Already, in factories behind steel gates and tall concrete walls, tens of thousands of workers, most of them women, spend their days stitching T-shirts, pants and sweaters for Wal-Mart, H&M, Zara and other Western retailers and brands.

One of the Bangladeshi companies here, the DBL Group, employs 9,000 people making T-shirts and other knitwear. Business has been so good that the company is finishing a new 10-story building with open floors the size of soccer fields, planted with row after row of sewing machines.

??Our family needed the money, so we came here,?? said Maasuda Akthar, a 21-year-old sewing machine operator for DBL.

As costs have risen in China, long the world??s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia ? at least for cheaper, labor-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids.

Li & Fung, a Hong Kong company that handles sourcing and apparel manufacturing for companies like Wal-Mart and Liz Claiborne, reported that its production in Bangladesh jumped 20 percent last year, while China, its biggest supplier, slid 5 percent.

??Bangladesh is getting very competitive,?? William Fung, Li & Fung??s group managing director, told analysts in March.

The flow of jobs to poorer countries like Bangladesh started even before recent labor unrest in China led to big pay raises for many factory workers there ? and before changes in Beijing??s currency policy that could also raise the costs of Chinese exports. Now, though, economists expect the migration of China??s low-paying jobs to accelerate.

And while workers in Bangladesh and other developing countries are demanding higher pay, too ? leading to a clash between police and protesters earlier this week in a garment hub outside Dhaka ? they still earn much less than Chinese factory workers.

Bangladesh, for instance, has the lowest garment wages in the world, according to labor rights advocates. Ms. Akthar, who is relatively well paid by local standards, earns about $64 a month. That compares to minimum wages in China??s coastal industrial provinces ranging from $117 to $147 a month.

??The Chinese firms that are beginning to get into trouble are producing textiles, rubber footwear and things like that,?? said Barry Eichengreen, a professor of economics and political science at the University of California. ??And there are lots of countries in South Asia and East Asia and in Central America that would like to fill this space.??

But Bangladesh has its own challenges to overcome.

China??s combination of a vast population of migrant workers, many with at least elementary school educations, along with modern roads, railways and power grids in its industrial provinces, has bestowed it with manufacturing capabilities that countries like Bangladesh cannot offer. Beijing also provides low-cost loans and other incentives to its industries that other countries have trouble matching for theirs.

Most of Bangladesh, meanwhile, suffers blackouts six to seven hours a day because it has not invested enough in power plants and natural gas fields ? deficiencies that the government is working on but that will not be eliminated quickly.

The country has a literacy rate of only 55 percent ? compared with more than 92 percent in China. As a result, workers in this country are only one-fourth as productive as the Chinese in making shirts, jackets and other woven clothes, according to a report by the Center for Policy Dialogue, an independent research organization based in Dhaka.

Despite its handicaps, Bangladesh nearly doubled garment exports from 2004 to 2009. And the industry now employs about three million people, more than any other industrial segment in this largely agrarian country of 160 million. From June through November last year, garment exports accounted for more than 80 percent of the country??s total exports of $7.1 billion.

Among developing countries, Bangladesh is the third-biggest exporter of clothing after mainland China, which exported $120 billion in 2008, and Turkey, a distant No. 2, according to the World Trade Organization.

And with nearly 70 million people of working age, Bangladesh could probably absorb many more of China??s 20 million garment industry jobs.

Still, some of the changes in China could prove to be mixed blessings for Bangladesh. If China allows its currency, the renminbi, to trade more freely, Bangladeshi exports would become more competitive.

But a stronger renminbi could also hurt Bangladesh by raising the price of machinery and fabric imported from China, its biggest supplier, said Ahmed Mushfiq Mobarak, an assistant professor of economics at the Yale School of Management. Over time, Bangladesh could buy more from other countries, like India, but those countries first would need to build up significant production capacity.
And as in China, workers in Bangladesh have started demanding higher pay. In recent weeks, labor protests have periodically shut down garment factories as thousands of workers battled police in Dhaka and other garment hubs like Gazipur. Late last month, police clashed with about 15,000 protesters on a busy Dhaka street lined with garment factories. In one exchange, a clutch of protesters lobbed bricks at police officers from an alley opposite the Outright Fashion factory, before fleeing as the officers charged at them with batons, tear gas canisters and the hot, colored water used to both disperse protesters and mark them for later identification.

Garment workers are demanding a 200 percent increase in the minimum wage, to 5,000 taka (about $71) a month ? which is how much workers with several years of experience now earn. The government, which plans to announce a new minimum wage soon, last increased it in 2006, to 1,662.50 taka (about $24). Since then, inflation has been as high as 9.9 percent a year.

??Most garment workers live in slum areas where one room costs 2,000 to 3,000 taka,?? said Mushrefa Mishu, president of the Garment Workers?? Unity Forum, an association that claims to represent more than 60,000 members.

Labor leaders want the government to make it easier for workers to form unions ? very few factories are unionized today ? and to require higher safety standards and better working conditions.

In January, H&M, Wal-Mart, Gap, Tesco and other Western clothing buyers asked the Bangladeshi government to raise the minimum wage and reset it every year, although the group did not specify what the wage should be. A spokeswoman for H&M, Malin Bjorne, said the company was willing to pay more for clothing to help support higher wages. It is unclear whether other companies would do the same.

But factory owners here argue that a big increase in wages would make them uncompetitive against Vietnam and other big producers, which have higher labor costs but also have better infrastructure and are more efficient producers. If that happened, Bangladesh??s China opportunity could prove all too fleeting, they say.

??If it??s 5,000 taka, I would close all my factories,?? said Anisul Huq, a former head of the Bangladeshi garment industry??s trade group and a factory owner whose customers include H&M and Wal-Mart. ??Even if it??s 3,000 taka, lots of factories will close within three or four months.??

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